Martin Feldstein says that the planned budget cuts at the Department of Defense shouldn’t happen. At first read the idea seems ludicrous. The U.S. already has a huge budget deficit caused in large part by excessive military spending. But Feldstein argues that depleted supplies and overworked equipment should be replaced now and that doing so would help to stimulate the economy. It’s true that defense spending will help maintain or even add jobs in that sector. But can that really be considered a priority when jobs are being eliminated by the thousands in other areas?
The base amount for the Department of Defense’s 2009 budget is over $515B, a number that includes a 9.5% increase in the operations and maintenance component and a smaller 5.3% hike in the procurement component. Is that sufficient to maintain the ready status of basic supplies and maintain/replace aging equipment? Presumedly with the decrease in fighting in Iraq that the equipment there is being serviced better and more frequently than a couple of years ago.
I’m not buying military spending as a priority sector for stimulus spending. I’m not even sure that increased government spending is that good of an idea, the pundits not withstanding. It was, after all, the spending of non-existent money that created the present economic situation in the first place.
If we are about to proceed with another massive government spending spree in the name of propping up an economy already bogged down with debt the least we can do is get some good out of it. There are many, many domestic public works projects that could be executed, including infrastructure projects such as road and bridge enhancement, urban renewal, and supplemental education, to name a few.
In this respect Hillary Clinton’s Green Corps makes some sense. I understand Barack Obama is considering something like that as well. I don’t agree that this would be a good use of public funds.
Renewable energy sources have not yet been vetted by the market to any large extent. Public funds directed to the jump-starting of that economic sector would be largely wasted. If we must spend, the money should be directed toward less complex, better understood projects that even government ought to be able to get right. Even moderately ambitious projects of this nature would, if successful, be better than spending the money on tanks and fighter planes that, frankly, we don’t need.